FINRA barred a former Morgan Stanley branch manager from engaging in principal and supervisory activities earlier this week, and one of the wirehouse's ex-advisors is crying foul.
Ami Forte, a once high-profile broker at Morgan Stanley, sharply criticized FINRA for allegedly tarnishing her reputation while issuing a disciplinary action against
Forte's criticism of FINRA escalates a heated dispute between herself, the regulator and Morgan Stanley, all of which stems from a $34 million arbitration case brought by the widow of Roy Speer, founder of the Home Shopping Network.
Not only did Speer and Forte have a client-advisor relationship, they were also having an affair.
Speer suffered from dementia prior to his death at age 80 in 2012. His widow, Lynnda Speer, filed a FINRA arbitration case against Morgan Stanley, alleging unauthorized trading, churning and negligent supervision among other misconduct. She won
Both Forte and McCoy were named in that arbitration case.
After the arbitration panel awarded damages to Mrs. Speer, Morgan Stanley terminated Forte ― but not McCoy. The firm cited "allegations involving adherence to industry rules and/or firm policy including with regard to use of trading discretion and timely reporting of liens," according to her FINRA BrokerCheck record.
To this day, Forte still denies any wrongdoing.
"I engaged in no wrongdoing of any kind and neither entered nor directed any of the trades that FINRA has deemed inappropriate. Morgan Stanley has led a campaign to tarnish my reputation for the misconduct of others in its employ, and I deeply resent and reject the allegations that have been made against me," she said in a statement provided to Financial Planning.
FINRA, meanwhile, has moved to investigate and punish those involved. The regulator notified Forte earlier this year that it was recommending disciplinary action be taken against her for violating NASD Rules 2510 and 2310, according to a note contained in her BrokerCheck report. Forte again denied the allegations.
And this week,
Forte, however, takes issue with the wording in that report, saying it improperly tarnishes her.
-
One JPMorgan client thought it was “odd and weird” that the advisor called during the Memorial Day holiday, on behalf of Merrill Lynch.
June 19 -
Craig Schmell says the firm terminated him because of alcohol and drug addiction issues he had 30 years ago.
June 1 -
The firm says former employee John Lockette agreed to have disputes heard in a private forum when he did not take advantage of an opt-out provision.
May 11
FINRA's acceptance, waiver and consent order does not name Forte or Lawrence, but uses initials to identify them (AF and CL, for example). In the order, FINRA says the two brokers under McCoy's supervision "used discretion without proper authorization to excessively and unsuitably trade" in the client's accounts. At one point, “CL” entered 300 trades in less than five minutes, FINRA says.
"This included placing well over 2,000 trades in the six accounts in a wide assortment of complex corporate and municipal bonds. In many instances, they placed these trades by exercising discretion in the accounts, even though none of the accounts were approved for discretionary trading by the firm. Further, in many instances, the trading activity included moving in and out of positions in the same bond in a matter of a few weeks or months. As a result of the excessive trading, RS's accounts generated commissions of over $9 million dollars during the relevant time period," FINRA says in the document.
Forte denies engaging in any misconduct, saying she was "completely unaware of any unauthorized trading," according to a press release issued by her attorney. She has also repeatedly claimed that at the time of the unauthorized activity, Lawrence handled most of Mr. Speer’s trades.
FINRA's language in the order "unnecessarily addressed the Forte situation," says Robert Pearl, Forte's attorney.
"Any suggestion that she engaged in any unauthorized trading is blatantly false," says Pearl, who is based in Naples, Florida.
Pearl says Morgan Stanley's case against Forte is a reversal of its argument in the Speer arbitration, when it denied any wrongdoing before a panel of three arbitrators.
"They promised her that her job was not in jeopardy during this Speer arbitration," he says. "Yet when the arbitration award came out, and despite their promises to her, they terminated her."
Other than the Speer case, Forte has no other client complaints listed on her BrokerCheck report.
Pearl also calls attention to what he says was disparate treatment of Forte and McCoy.
Unlike her former manager, she was terminated. She's also fighting Morgan Stanley in arbitration over claims that she owes the firm money for the Speer settlement in addition to the unpaid balances of promissory notes. Forte is also seeking damages for wrongful termination. The case is ongoing, Pearl says.
McCoy, meanwhile, was not terminated, per BrokerCheck records. It's also not clear from regulatory records whether Morgan Stanley is also seeking McCoy to contribute to the Speer award. Pearl says the wirehouse entered into an agreement with McCoy and isn’t seeking a contribution from him.
McCoy's attorney, Burt Wiand, declined to address comments by Forte.
"Mr. McCoy is no longer registered with FINRA and he reached an accommodation with FINRA to resolve any problems they may have," says Wiand, an attorney at Wiand Guerra King in Tampa, Florida.
A Morgan Stanley spokeswoman declined to comment on McCoy's time at the company, adding that the firm is focused on its arbitration case.
"Morgan Stanley looks forward to addressing Ms. Forte’s conduct in its upcoming arbitration with her," a spokeswoman for the company said in a statement.
The arbitration hearings are scheduled for this fall, according to Forte’s attorney.
